Central Banks' Gold Buying Surges to 54-Year High Amid Uncertainty
Gold, a precious metal prized since ancient times, continues to hold significant value for central banks today. In 2018, central banks bought gold at the highest volume since 1967, a trend that has persisted due to increasing economic and political uncertainty.
Gold's appeal lies in its role as a safe haven and reliable store of value. Central banks acquire and hold gold primarily for financial insurance against geopolitical tensions, economic uncertainty, inflation, and declining trust in fiat currencies. This is particularly relevant amid rising global debt and financial instability.
The allure of gold is not new. It has been used for grand jewellery and ornaments since ancient Egyptian times, and was valued by the Incas and in ancient Greece. Even Sir Isaac Newton experimented with alchemy to turn base metals into gold. The first gold coins were produced by Lydian merchants around 700 BC for trading goods and services.
Gold's relevance extends beyond its cultural and symbolic value. It is still used in modern items such as computers, awards, and dentistry, with the first use in dentistry occurring around 4000 years ago in Asia.
Gold prices experienced a significant drop at the beginning of the Corona crisis due to panic selling, but have since increased steadily. This volatility underscores gold's role as a safe haven asset, providing protection against currency devaluation.
Gold's enduring appeal and relevance, from ancient times to the present, is evident in its continued acquisition by central banks. Despite the shift from physical gold to paper money in the late 1800s, gold remains a crucial reserve asset, backed by governments and held as reserves by central banks worldwide.
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